This book therefore aims to provide a comprehensive and complete treatment of the entire professional practice of a venture capital firm. It describes how venture capital firms raise funds; search for and screen investment opportunities; conduct due diligence on management, marketing, manufacturing, financial, and legal aspects of the businesses under evaluation; how they value, structure, negotiate, and legally document the deals; how they monitor, add value to, and realize value from their investments, to finally achieve superior financial returns from the investments.

A professional practice encompasses the expertise, concepts, principles, theories, methodologies, unique terminologies, systems, and standards of the profession. All these are elucidated in this book. In addition, this book suggests best practices, systems, report formats, internal documentation, and database structures that a venture capital firm should adopt to become a world-class organization. Furthermore, issues affecting a venture capital firm, such as corporate governance, public disclosure, corporate structure, corporate qualities and performance measures, tax, legal, and staffing, are also discussed.

This book may be used as a reference handbook for practitioners in the venture capital industry. It is also suitable for professionals in the private equity industry, as the concepts and practices are very similar. The practices described in this book are those of U.S. firms, and are therefore relevant to all venture capital and private equity firms worldwide. U.S. practices have become de facto standards due to the dominance of the U.S. industry and the spreading of U.S. firms into Europe and Asia.

Many venture capital professionals learn on the job. It is hoped that this book will help to fill in knowledge gaps and raise standards in the profession, by providing a comprehensive reference on important aspects of the practice. In particular, the systematic approach to due diligence described in this book, an original methodology conceived by the author, could be a useful practical aid to practitioners in this difficult but critical process.